False Advertising: Supreme Court to Decide Who Can Sue

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact

lexmarkvscThe Supreme Court has recently agreed to hear argument in Lexmark v. Static Control that will strike at the very heart of false advertising jurisprudence by asking who is allowed to bring false advertising claims.  The Lanham Act states that such claims may be brought “by any person who believes that he or she is or is likely to be damaged by” an alleged misrepresentation “in commercial advertising or promotion.”  Courts have varied in interpreting that language to determine exactly who is an appropriate plaintiff.

Summary of Claims Giving Rise to Dispute

This case was brought over a decade ago by Lexmark International, a manufacturer of printers and toner cartridges designed to be exclusively compatible with one another.  Lexmark’s grievances arose out of toner cartridge “remanufacture,” through which empty toner cartridges are collected, refilled, and sold back to the consumer.  Lexmark remanufactures some of its own cartridges, but has taken great pains to try to make that process impossible for others.  Other remanufacturers, however, found ways to remanufacture its cartridges, and directly competed with Lexmark in the market for them.  Lexmark and the remanufacturers involved in this case eventually settled the claims between them.

The case has continued, however, and caught the Supreme Court’s eye, because Lexmark’s primary target was Static Control Components, Inc.  Static Control does not compete in the toner cartridge market, but rather manufactures technology necessary to the remanufacturing process, including parts specifically designed to facilitate the remanufacture of Lexmark cartridges.  It then supplies that technology to remanufacturers.

Lexmark’s claims included patent infringement relating to part of its cartridge design, and copyright infringement relating to computer code in a microchip therein.

False Advertising Counterclaims

When Lexmark began to inform remanufacturers (Static Control’s consumers) that the technology Static Control provided was infringing and illegal, Static Control returned fire with, among other things, a false advertising counterclaim under the Lanham Act.  Static Control contended that Lexmark’s allegations of infringement were damaging to its reputation and business.

District Court Applies Antitrust Factors and Finds No Standing

The District Court for the Eastern District of Kentucky dismissed the false advertising claims because Static Control lacked standing.   The court reached that conclusion by applying a multi-factor test that the Supreme Court has used to determine antitrust standing.

Sixth Circuit Declines to Adopt Factors and Finds Standing Based on Reasonable Interest

Static Control appealed to the Sixth Circuit which, applying a more permissive standard, found that Static Control did have standing, because it had a reasonable interest that it sought to protect against likely damage by the false advertising.

Both the multi-factor test and the “reasonable interest” test have been applied by multiple circuits.  In opposing certiorari, Static Control tried to downplay the difference between those tests—and the circuit split which Lexmark bemoaned—by arguing that the factors merely guide a court in deciding whether a party has a reasonable interest.

The More Restrictive Categorical Test

Even if those two tests can be conflated, however, there is also a third, more restrictive standard that other circuits have adopted: the categorical test, which holds that only an actual competitor can bring a false advertising claim.  Under that test, Static Control, which sells neither printers nor toner cartridges, would not be able to bring a false advertising claim against Lexmark.

Hopefully the Supreme Court’s involvement in this matter will benefit future prospective plaintiffs and defendants by lending certainty and uniformity to this otherwise inconsistent area of false advertising law.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Trademark, Copyright & Unfair Competition | Attorney Advertising

Written by:

Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact
more
less

Foley Hoag LLP - Trademark, Copyright & Unfair Competition on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!